annual report 2004 - Severočeské doly a.s.

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64 —— 65 Deferred Taxes, Net At December 31, 2004 and 2003 deferred tax assets (liabilities) were comprised of the following (in CZK million): 2004 Deferred tax assets: 2003 Accumulated provision for decommissioning, reclamation and mining damages 1,158 1,130 Accumulated provision for mining damages 213 — Allowance for uncollectable receivables 5 6 Allowance for obsolete inventory 15 15 Allowance for impairment of fixed assets 115 159 Investments at fair value 1 3 Total deferred tax assets 1,507 1,313 Deferred tax liabilities: Depreciation of fixed assets (418) (393) Repairs and maintenance accrual (233) (248) Capitalized costs of provisions (390) (446) Investments in associates (61) (139) Total deferred tax liabilities (1,102) (1,226) Total deferred tax, net 405 87 Deferred tax assets are recorded at an amount which management believes will ultimately be realized. Realization of deferred tax assets is dependent upon sufficient future taxable income during the periods that temporary differences are expected to be available to reduce taxable income. 13. Personnel Expenses and Average Number of Employees Average number of employees and the composition of personnel expenses (in CZK million): 2004 2003 Wages and salaries 1,238 1,226 Social and other personnel expenses 514 495 Total personnel expenses 1,752 1,721 Number of employees 5,038 5,242 14. Financial Instruments The Company, in the normal course of business, uses various types of financial instruments, including items such as cash, cash equivalents, short-term securities and trade receivables, which expose the Company to market or credit risk. Management believes that the estimated fair values of these financial instruments approximate their carrying amounts. The Company pursues a conservative risk management and investment policy, which entails diversifying financial instruments with reputable financial institutions. There is a written internal policy “Investment strategy and financial assets management” that governs the allowed types of financial instruments and the rules of risk management (credit risk, interest rate risk, foreign exchange risk, liquidity risk). The Company investments contain a portfolio of liquid financial instruments with high quality ratings and with suitable time horizons. The financial instruments used by the Company for investments include government bonds, treasury bills, commercial and bank debentures, eurobonds, term deposits and mutual fund units. The Company monitors the basic market indicators for management of interest rate risk. 15. Commitments and Contingencies By 2006 the Company will purchase one piece of heavy mining machinery having a value of CZK 906 million.
16. Related Party Transactions The balance sheet includes the following amounts resulting from transactions with related parties (in CZK million): 2004 Trade receivables 2003 ČEZ, a.s. 536 509 Teplárna Ústí nad Labem, a.s.* — 29 Other 1 2 Total trade receivables 537 540 Trade payables SHD – KOMES a.s. 44 41 ČEZ, a.s. 10 10 PRODECO, a.s. 24 26 Other 10 8 Total trade payables * The Company was sold in 2004. 88 85 Sales and purchases with related parties amounted to the following (in CZK million): 2004 Sales 2003 ČEZ, a.s. 5,076 5,179 Teplárna Ústí nad Labem, a.s.* 289 317 Other 6 8 Total sales 5,371 5,504 Purchases PRODECO, a.s. 167 109 SHD – KOMES a.s. 435 367 ČEZ, a.s. 47 49 Other 14 14 Total purchases * The Company was sold in 2004 663 539 The Group mostly sells lignite and provides services to related parties. Purchases from related parties comprise purchases of machinery, transport and other services in particular. All transactions are concluded under normal terms and conditions. 17. List of Subsidiaries Entity Place of incorporation Principal activity Ownership interest SD – Vrtné a trhací práce, a.s. Czech Republic Drilling and blasting 100.00% SD – Autodoprava, a.s. Czech Republic Transportation 100.00% SD – 1.strojírenská, a.s. Czech Republic Engineering 100.00% SD – Kolejová doprava, a.s. Czech Republic Rail transportation 100.00% SD – Humatex, a.s. Czech Republic Sale of chemicals 100.00% Skládka Tušimice, a.s. Czech Republic Waste disposal 98.00% 18. Reconciliation of Retained Earnings and Net Profit The accompanying financial statements are presented on the basis of International Financial Reporting Standards. Certain accounting principles generally accepted in the Czech Republic (CAS) do not conform to International Financial Reporting Standards used in preparing the accompanying financial statements. A description of the significant adjustments required to conform the Group’s statutory balances to financial statements prepared in accordance with International Financial Reporting Standards is set forth in the following tables.
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SEVEROČESKÉ DOLY a.s. — annual
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Severočeské doly a.s. is the larg
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RAM The operating part of a heavy t
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CONCERTINA The protective concertin
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Most Important Events of 2004 Janua
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10 —— 11 Interview with the Cha
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12 —— 13 Directors and Officers
Page 16 and 17: 14 —— 15 Jaroslav Volšický (*
Page 18 and 19: 16 —— 17 Executive Management T
Page 20 and 21: 18 —— 19 Company Profile Severo
Page 22 and 23: 20 —— 21 Report of the Board of
Page 24 and 25: 22 —— 23 Sales and Marketing Sa
Page 26 and 27: 24 —— 25 Product structure (%)
Page 28 and 29: 26 —— 27 Developments in coal e
Page 30 and 31: 28 —— 29 Developments in invest
Page 32 and 33: 30 —— 31 How Investments are Fi
Page 34 and 35: 32 —— 33 Employee education str
Page 36 and 37: 34 —— 35 municipalities and oth
Page 38 and 39: 36 —— 37 tion plants based on t
Page 40 and 41: 38 —— 39 on the innovation of t
Page 42 and 43: 40 —— 41 Financial Performance
Page 44 and 45: 42 —— 43 sumption of materials
Page 46 and 47: 44 —— 45 Shares and Shareholder
Page 48 and 49: 46 —— 47 Right to a Dividend 1.
Page 50 and 51: 48 —— 49 Strategy and Outlook f
Page 52 and 53: 50 —— 51 Outlook for 2005 Terri
Page 54 and 55: 52 —— 53 Report of Independent
Page 56 and 57: 54 —— 55 Consolidated Statement
Page 58 and 59: 56 —— 57 Notes to Consolidated
Page 60 and 61: 58 —— 59 Held-to-maturity inves
Page 62 and 63: 60 —— 61 Segments The Group has
Page 64 and 65: 62 —— 63 6. Investments in Asso
Page 68 and 69: 66 —— 67 The effect on retained
Page 70 and 71: 68 —— 69 Cash and In-kind Incom
Page 72 and 73: 70 —— 71 Organizational Chart G
Page 74 and 75: 72 —— 73 Shareholder Financial
Page 76 and 77: 74 —— 75 Persons Responsible fo
Page 78: Consulting and production: © B.I.G
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